Mainly because the Bush administration is looking at two things:
A major point of contention with the White House was Bush's demand that nearly all poor children eligible for the program be found and enrolled before any in slightly higher-income families could be covered.
Bush also has opposed using an increased tobacco tax to fund the program expansion. The bill includes a 61-cent rise on a package of cigarettes.
To summarize, this bill, put forward by Democrats, allows states to avoid covering poorer children in favor of diverting money to wealthier children instead; furthermore, it funds doing so by means of a tax that, as Democrats themselves claim, disproportionately affects poorer people and families.
Thus, the Bush administration is going to veto it -- because they think a program designed to cover the poor should cover the poor first and not tax the poor to pay for it.